The Effect Of Corporate Multinationalism On Shareholders' W

US evidence shows that the announcement of international acquisitions will result in significant positive abnormal returns for shareholders of multinational corporations (MNC) not operating in the target firm's country. Insignificant positive abnormal returns will be experienced by the shareholders of American firms that expand internationally for the first time, while insignificant negative abnormal returns will be experienced by the shareholders of MNCs already operating in the target firm's home country. If the US firm expands into new industry and geographic markets - especially markets less developed than the US economy - the abnormal returns will be larger. Shareholders of MNCs gain the greatest benefits from foreign acquisitions when there is a simultaneous diversification across industry and geography.